Sydney and Melbourne’s housing markets are performing more strongly than expected partly because of the large number of migrants flocking to the country’s two biggest cities, a senior ANZ Bank executive says.

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The housing affordability dilemma

The bank’s Australian chief, Fred Ohlsson, pointed to the potential oversupply of units in Brisbane as one reason for the crackdown, which will bar new lending for customers with deposits of less than 20 per cent of the purchase price.

Thousands of new units are also set to come onto the market in Sydney and Melbourne, but Mr Ohlsson said demand had been surprisingly resilient in these cities, thanks in part to high migration.

«The demand for housing is probably holding up a little bit stronger than we thought, even four or five months ago, and we’re now heading into Spring, which is traditionally and seasonally an important part of the year,» Mr Ohlsson said in an interview.

«The other thing I would say is the constant net migration to cities like Sydney and Melbourne, which is strong.»

Figures on Wednesday underlined the strong population growth in NSW and Victoria, which economists say will put a growing strain on public infrastructure.

The property markets in Sydney and Melbourne continue to be resilient. Photo: Rob Homer

Commonwealth Bank economist Michael Workman said Victoria’s population boom was being driven by overseas migration and interstate migration, and he estimated most of the growth was occurring in Melbourne.

Given the strong growth in Melbourne’s population, he suggested the «much-debated oversupply» of units in the city was «marginal,» as rents were still increasing.

Three of the big four banks are now tipping interest rates will start rising next year, but Mr Ohlsson said the bank took comfort from the fact many of its customers had extra savings, their ability to cope with higher rates had been tested, and that the RBA would only lift rates gradually.

Brisbane’s property market is weakening. Photo: Harrison Saragossi

«Any increase I suspect would be gradual with a solid amount of time to observe impacts,» he said.

Mr Ohlsson said there had been a «slight deterioration» in ANZ’s home loan portfolio in resources areas , but credit quality was holding up in NSW and Victoria. Among its business customers, he said there had been a slight deterioration in credit quality, reflecting the «two-speed economy.»

Latest figures on price growth suggest housing conditions have slowed in recent months, with CoreLogic’s home value index showing the Sydney house prices were flat in August, and rose 0.3 per cent in in Melbourne.

CBA’s Mr Workman said that Australia’s total population had swelled by 40 per cent since 1990, and this was a key reason for the quick pace of house price growth.

He also noted that population growth via natural increase (births minus deaths) was also growing by about 142,000 a year, a trend that is likely to continue pressuring public infrastructure.